New Article Published in WQP Magazine: Where to Turn for Business Succession Planning

See the full article published here:https://www.wqpmag.com/educationtraining/where-turn-business-succession-planning

It is oftentimes said that in the water industry the only thing our coworkers and colleagues fail at is retirement. Every day, for months, years and decades on end, those of us privileged enough to work in this space come to work and ensure that clean water reaches the households and businesses that need it, and dirty water gets cleaned before being sent back into the environment. And yet, as we all know, 2020 and 2021 have reminded us that the only constant in life is change.

The water industry is in the midst of a giant shift — not just due to COVID, politics or technology — but due to demographic destiny. The “Silver Tsunami,” that humorous refrain we all speak about as we look around industry conferences and see a sea of grey hair, has only accelerated over the past year as individuals across the country have decided that now is as good a time as any to begin the process of retiring. And, while the potential lack of trained, certified water and wastewater operators tends to receive the most attention in this regard, it is clear that the retirements of small or medium-sized business owners potentially poses the greatest threat to the future health of this industry. Who is going to transport those chemicals when an owner retires? Who is going to replace those pumps when an owner exchanges his/her line card for golf clubs? If retirement is on the horizon or if a second generation is unable or unwilling to be around for transferring ownership, then now is the time to begin thinking about the future of the business.

According to the California Association of Business Brokers, retiring Baby Boomer business owners are expected to sell or bequeath $10 trillion worth of assets over the next two decades, currently held across 12 million private businesses. The numbers in the water industry correspond with this broad national trend. According to a 2010 report by the American Water Works Association (AWWA), 30 to 50% of water and wastewater utility workers will retire or quit within the next 10 years. Notably, the average age of an operator is 47 years old and the average age of a small business owner in the U.S. is slightly older at 50.

The 4 Categories of Potential Business Succession Planning
For those thinking about retirement, one fact that should provide comfort is that there are many available options to consider. As many owners can attest, investors across the country are looking to invest in water and environmental companies, with owners likely receiving an email or more per month requesting a conversation to discuss the company’s future. Prior to accepting that conversation (or deleting that email), it is important to understand who the individuals on the other end of the telephone are and what might be their motivations. Typically, individuals that approach business owners can be broadly categorized into four categories: private equity, strategics, employees and industry professionals.

Private equity firms, typically private groups of individuals that receive third-party investor money and use it to buy companies for a period of five to seven years and then re-sell, have begun to look more into water as they see how critical and steady this industry is through recession, pandemic and other issues.
Strategics, the large national or multi-national companies that many in this industry compete with, have also begun to more actively seek out and buy companies in the industry with the goal of “rolling up” certain capabilities, technologies, or regions to do business.
Third, an attractive option is for business owners to sell their business to their employees — either via a 100% buyout or a “seller’s note” where employees pay the owner over a number of years from the cash flows of the business.
The last option is to find a buyer with experience in the industry that is looking to become an “entrepreneur through acquisition” — an individual or group with committed capital looking to buy an existing water firm rather than start a new one (such as Sylmar Group).
How to Prepare for Retirement
Once an owner has decided that they want to retire and the most suitable path for doing so, it is equally if not more important to begin to think about how to prepare for this retirement and ensure the long-term success of the business and its employees. In doing so, there are two primary tasks to manage—the “financial” and the “operational.” Some owners choose to focus on one or the other, but it is important to take each into account, both for ensuring that an acquirer will provide a fair price for the legacy the owner has built, while also ensuring that as an owner transitions out of the business, the appropriate vendor relationships, customer relationships and treatment expertise can be passed along to the right parties to ensure uninterrupted service.

In an ideal scenario, it is time to begin thinking about an ownership/management transition 10 or more years prior to retirement and concurrently start to promote younger employees into management positions. As we all know, managing a sales pipeline or service network is different than managing a team. Building out this leadership team will also provide the owner with the opportunity to begin knowledge transfer (sales, water treatment, chemicals) to the next generation, think through potential growth plans and decide where one wants to leave the business for the next owner or owners. Five years out, owners should begin to transition sales and vendor relationships to other employees in order to help minimize transition risk. Importantly, at this point, it is also important to begin to get a company’s finances in order. Typically, investors will look through the previous three years of financials with a fine-tooth comb so make sure that customer relationships are in order, that the customer base is diversified so you are not overly reliant on any one partner, and potentially hire a part-time controller or CFO to help begin organizing your income statement, balance sheet, cash flow statement, etc.

Lastly, about one year out from an ideal retirement date, it is time to start reaching out to the capital partners you have spoken to over the past several years. Remember that selling is typically a six-month process (at the minimum), including several months to get a fair offer and then another several months for the investor to do his/her due diligence.

For many years, the water industry has chuckled to itself about the Silver Tsunami, without providing those with grey hairs a clear-eyed vision of what this trend means for them. At this point in time, it is important for owners to remember that they are not alone. This industry is full of people who took their first job doing well service or cleaning tanks in the 70s and 80s that now, all of a sudden, are tasked with figuring out not if they should retire, but how.

While undeniably a stressful process, owners have a variety of resources at their disposal as they think about the best way to spend more time with the grandkids or more time on the golf course. Speak with other owners that have sold in the past, talk with investors that seem to know a bit about your business/industry well in advance of deciding to sell, and read online about the do’s and don’ts of a sale process. In the end, an owner’s business is his/her baby, and ensuring that it is treated well as it grows into its next stage of development is what everyone in this process deserves.

Sylmar President Michael Warady Presents on P3 Financing for Water Projects

The annual P3 Water Summit examines how alternative project delivery methods are being used to advance critical water projects of all sizes across the country. This Summit explores innovative approaches in project design, build, risk, financing, and O&M that offer communities new ways to meet complex water, wastewater, and stormwater challenges.

Sylmar President Michael Warady was invited to share how Sylmar’s unique structure allows it to innovate in the world of P3s along with Carlos Riva, CEO of Poseidon Water, and John Joyner, Managing Partner at Capital Water Partners.

Watch the video here: https://www.youtube.com/watch?v=t6VNPx8cNfY

Different Flavors for Different Uses: A One Water Framework for American Infrastructure

With drought in the southwest, flooding in the southeast and Midwest, and climate change related disasters threatening the east coast, America’s water supply today feels uncertain, if not explicitly in danger. Improving our water management plans to better sustain our current water supply needs is a necessity. One way to accomplish this is by enabling a One Water framework. The idea of One Water is not new, and yet implementing such a water management policy across the US has become increasingly difficult, due to both permitting and regulatory concerns but also due to our inability to rethink the way we utilize and deal with the natural water cycle. According to the Water Research Foundation, “One Water is an integrated planning and implementation approach to managing finite water resources for long-term resilience and reliability, meeting both community and ecosystem needs.” One water is all about managing water holistically; it is about reusing water in creative and intuitive ways and using various water supplies of varying qualities for their most appropriate uses. Working towards the innovative collection and reuse of our most essential resource is critical to ensuring that we build and maintain a human water cycle built for the future. We must not foolishly assume that we will be able to use drinking water for flushing toilets, irrigating grass, or operating cooling towers in the future. But understanding how we implement such a framework is equally as important as the framework itself.

Today, One Water is just an idea – one that utilities and cities and consulting engineers have spent millions of dollars developing reports about but have never actually implemented. And the timing between planning development and implementation is vital as we consider how technology will continue to improve over the next several decades. Los Angeles, for one, finished its planning stage in 2018 and is not projected to be fully implemented until 2040. In Carson, California, a 500,000-gallon-per-day demonstration facility to recycle Los Angeles’ wastewater has been constructed and is now being tested, potentially to pave the way for a full-fledged facility treating and reusing 1.5 billion gallons of water daily for reuse across Los Angeles. While such large-scale infrastructure lends itself to powerful headlines and political slogans, regional-scale infrastructure will likely be an impediment to, rather than a catalyst for, a truly One Water infrastructure system. Instead of building a Carson project that would require sixty miles of purple pipe to be laid through streets such as Westwood Blvd and disrupting one of the most gridlocked cities in the world to transport the purified water, it would make far more sense to deploy a series of decentralized systems across the city to supply water locally. Instead of building 10-million-gallon capacity tanks across the city to capture rainwater during the five days a year that it rains in Los Angeles, perhaps it would be wiser for the city to spend its money in ways tailored to local realities – enabling green infrastructure to more efficiently capture rainwater or financing desalination facilities to supply a drought-proof supply. Sylmar understands the merits of a One Water system yet believes that cities from Los Angeles to New York City need to better design their infrastructure to be geared towards action – focusing on near term implementation, adoption of new technologies, and adaptation to the realities of tomorrow.

More resilient, more sustainable, and more tailored water use will create a more appropriate form of infrastructure that maximizes the value of our limited water supply. The idea of One Water may seem obvious, yet its most efficient implementation feels incredibly distant. Just like there is no reason that we should be flushing potable water down the toilet, we should also not be spending on facilities that won’t be built for the next 25 years or on tanks that will have a less than five percent utilization rate. Sylmar believes in One Water’s principles and views it as an excellent framework for assessing water issues, but believes current proposals are too slow and too staid. Now is the time to make progress and to be creative as we plan a One Water system – there is too much at stake to continue to operate as we do today.

https://watereuse.org/wp-content/uploads/2018/05/SESSIO1.pdf
http://uswateralliance.org/one-water/one-water-leadership-insights-0
http://www.uswateralliance.org/one-water/one-water-leadership-insights-2
http://uswateralliance.org/sites/uswateralliance.org/files/publications/Roadmap%20Executive%20Summary.pdf
https://www.lacitysan.org/san/faces/home/portal/s-lsh-es/s-lsh-es-owla;jsessionid=zZhefphOFqYHYDpQBU-laJlbytFZrXf4gJ9u9RKiQJ7cv7bQdMzk!1385581480!-1554529358?_afrLoop=1440919166696633&_afrWindowMode=0&_afrWindowId=null&_adf.ctrl-state=iiba9maxz_1#!%40%40%3F_afrWindowId%3Dnull%26_afrLoop%3D1440919166696633%26_afrWindowMode%3D0%26_adf.ctrl-state%3Diiba9maxz_5
https://www.lacitysan.org/cs/groups/sg_owla/documents/document/y250/mdmx/~edisp/cnt031540.pdf
https://www.waterworld.com/wastewater/reuse-recycling/article/14068614/metropolitan-sanitation-districts-launch-new-water-recycling-demo-plant

The Next Frontier: Digitization of US Water and Wastewater Infrastructure

When we think about how to design, build, and operate the next generation of more resilient United States’ water infrastructure, one of the key opportunities, that will differentiate a modern infrastructure buildout as compared to the version built 100 years ago, is adoption of new digital capabilities that have already been adopted in many other industries – from telecom to energy. These digital monitoring and operational capabilities, known referred to as digital water, represent one of the greatest opportunities for US utilities to modernize their operations in the last one hundred years – providing the greatest ‘bang for the utility’s buck’.

While many water and wastewater utilities collect large volumes of data on their procedures, only 20% of these utilities believe they are able to use it effectively. But what data is being collected and why can’t it be used? Everyday water quality and quantity parameters are a stable of good utility operations, but over the past several years new digital monitoring solutions – from digital twinning to real time water quality – have emerged as new, untapped opportunities for operational improvements. And yet, as firms like Innovyze and Hach begin to build out improved digital monitoring ‘inside the fence’, a critical piece of the puzzle remains overlooked. In addition to improving digital capabilities within plants, utilities need to begin implementing digital monitoring solutions downstream, where their water is being consumed, and upstream, where water is sourced.

As water utilities begin to experience, and implement, more decentralized water systems, there is inevitability a need to begin to implement for digital solutions to monitor water after it has left the plant. At the individual residence level, homeowners now have the capability to monitor their water usage and routinely check systems for leaks behind the meter. A case study of installed systems by South East Water in Australia found leaks in greater than 10% of homes with some homes leaking as much as 51% of its daily used water. Another key technology that remains the holy grail of downstream water monitoring yet is not widely available today, is one that allows homeowners to quickly and easily test their water quality. As we think about the next ten years, there is clear evidence that a greater number of residential customers will have these technologies at their fingertips; the trick will be for utilities not to view this forced transparency as a threat, but an opportunity. Similar to decentralized systems across commercial and industrial properties, widespread monitoring at the residential level will provide utilities with unprecedented level of insight into variables such as demand, non-revenue water, and even prevalence of disinfection byproducts (DBPs). Rather than fighting the proliferation of this data amongst consumers, utilities should in fact be actively funding these monitoring systems and constantly improving utility systems based on this new information.

On the other end of the water industry value chain lies another digital water opportunity, upstream of water treatment plants and municipal supplies. New York City, as many throughout the industry know, has one of the most advanced monitoring and management programs for the Catskill-Delaware watershed, allowing the New York Department of Environmental Protection to maintain a filtration waiver on its water supply for up to 90% of flows to the taps of New York City residents. Water quality in New York’s upstream reservoirs, streams, and rivers (also known as the WOH Watershed) is tested millions of times per year (and growing) by both human and in-stream monitoring. This information collected upstream provides New York with the information to influence the behavior of nearby farmers and homeowners to protect downstream water quality – buying out homes in danger of flooding and planting trees along the edges of farms to soak up excess nutrients from agricultural operations prior to floating downstream. While many of the 42,000 water utilities across the country rightfully claim that New York’s infrastructure investment budget is larger than their own, it is equally true that mitigation is cheaper than emergency response. New York’s upstream investment in monitoring and best management practices has offset 10x greater cost in building a new filtration plant and ongoing O&M work. Utilities across the country would be wise to learn not only from New York’s example, but on upstream monitoring in general, that will allow them to integrate this additional information into a proactive water purification system that can predict and optimize water treatment based on water flowing from upstream. Spending to upgrade digital water monitoring systems upstream will reap huge benefits both for utility cost savings as well as customer water quality satisfaction.

It is undeniable that utilities over the next many years will need to begin monitoring water quality outside of their plants, in order to both inform decisions at the plant level as well as make more informed decisions about future infrastructure upgrades. Sylmar is working to support utilities, companies, and homeowners as we digitize their water systems.

US utilities to intensify digital water programmes – here’s why


https://www.xylem.com/en-us/making-waves/water-utilities-news/the-rise-of-digital-twins-and-decision-intelligence-in-water-utilities/
https://vertassets.blob.core.windows.net/download/0453177b/0453177b-9d9a-4cb2-abe0-779df046938f/iwa_2019_digital_water_final_web.pdf
https://www.waterworld.com/technologies/amr-ami/article/16192432/advanced-metering-infrastructure-drivers-and-benefits-in-the-water-industry#:~:text=AMR%2C%20or%20Automatic%20Meter%20Reading,numbers%2C%20and%20writing%20them%20down.&text=Conversely%2C%20AMI%20enables%20two%2Dway,system%20and%20the%20metering%20endpoints.
https://www.buoy.ai/
https://meetflo.com/
https://southeastwater.com.au/SiteCollectionDocuments/CurrentProjects/Projects/CASE%20STUDY%20-%20DIGITAL%20WATER%20METER_BELGRAVE%20SOUTH.pdf
https://www.sciencedirect.com/science/article/abs/pii/S095717871400097
https://www.smart-energy.com/industry-sectors/digitalisation/
https://www.nytimes.com/2018/01/18/nyregion/new-york-city-water-filtration
https://www.innovyze.com/en-us/products/infowater

The Next Bacterial Concern: Legionella and Premise Plumbing

Life in 2020 has been upended by a series of turbulent events – most notably the COVID-19 pandemic and widespread social protests spreading across America – leading to widespread lockdowns and temporary abandonments of office and public infrastructure. As states across the country begin to slowly reopen amidst these once-in-a-generation circumstances, their populations may unknowingly be walking into yet another disruptive, bacterial concern within their offices, restaurants, and buildings.

Empty buildings and unattended HVAC systems, while seemingly nondescript, oftentimes unintentionally promote the unwanted consequence of harmful bacteria growth in stagnant plumbing systems running overhead. Legionella pneumophila, commonly known as legionella, is a bacterium that, when aerosolized, can be inhaled by humans and cause outbreaks of Legionnaire’s Disease within populations with weakened or compromised immune systems such as hospitals and nursing homes1. Warm stagnant water, rust, scale, and the presence of other microorganisms all correlate strongly with the rise of legionella populations, and also happen to be predominant characteristics of unattended premise plumbing fixtures and cooling towers. Legionnaire’s disease causes severe pneumonia, fever, muscle aches, and shortness of breath in individuals and populations with compromised immune systems. The disease infects 52,000 people annually in the US, resulting in the death of one in ten of those afflicted4, rendering it nearly one hundred times as deadly as typical influenza5. How has this bacterial infection, yet another unseen threat in our lives, managed to escape attention for so long?

As the US broadly begins to phase in state reopenings, the water industry, unsurprisingly, will once again play a role in making sure the US population does not forget about other threats such as legionella as they return to work. In much of the past, following outbreaks or situations that give rise to Legionnaire’s, water utilities have recommended flushing out cooling towers and plumbing systems to eliminate the risk of bacterial buildup and then, prior to allowing reentry, perform readily available legionella testing through a local or regional water quality analytical lab. Yet it is unlikely that we will see much of the US building infrastructure flush their systems as the entire nation goes back to work. In a time of increasing concern surrounding water quality and quantity throughout the country, simply flushing a system, wasting thousands of gallons of water, and starting again seems at best, inefficient, and, at worst, wasteful.

The Sylmar team works with clients to implement new premise plumbing treatment systems as a solution both for short-term, post-COVID boot-up scenarios as well as long-term mitigation of the legionella threat in buildings. Building operators and treatment system integrators work with Sylmar and established technologies to set up systems within their own buildings to prevent harmful bacteria from ever forming in the first place. These solutions are not necessarily new – companies like Nalco have been installing systems to chlorinate, disinfect, and extend the life of cooling tower and HVAC equipment for decades9. And yet, novel ionization and filtration technologies have proliferated and decreased in costs over the past decade – leading to more efficient and cost-effective methods to provide individuals living and working in these buildings with a safe working environment. This new preventative method for legionella treatment – decentralized, resilient, sustainable – is the future of premise plumbing and legionella mitigation. For far too long our buildings have believed that the far away, centralized treatment plant will solve their water quality concerns. In many cases that may be true; with legionella, the new, decentralized way is the best way.

As COVID-19 opens our eyes as to how microorganisms can impact our lives in previously unforeseen ways, it is time that the water industry similarly begin to take seriously the potential for legionella to cause an outbreak of another kind. Sylmar works with technologies, companies, and utilities that seek to deploy proven, effective, and environmentally friendly systems to replace the inefficiency and wastefulness of simply trying to flush this problem away. Sylmar is here to help make 2020 not just a year of viral infection, but one in which we begin to think more holistically about the future of our relationship with our water and protecting our most vulnerable populations from the dangers of legionella is one step in that direction.

https://www.cdc.gov/coronavirus/2019-ncov/php/building-water-system.html
AWWA Webinar: “Return to Service: Addressing Water Quality in Buildings with Low or No Use”
https://www.cdc.gov/legionella/wmp/overview/growth-and-spread.html

https://www.cdc.gov/flu/about/burden/index.html
https://www.beckershospitalreview.com/infection-control/illinois-to-pay-6-5m-to-families-of-legionnaires-victims.html
https://www.nprillinois.org/post/illinois-legionnaires-disease-more-prevalent-coronavirus#stream/0

NYC outbreak, this one on Lower East Side


https://www.ecolab.com/nalco-water/expertise-and-innovation/water-safety
https://www.ecolab.com/nalco-water/expertise-and-innovation/water-safety/legionella-control-strategies
https://www.liquitech.com/products/
https://www.liquitech.com/products/copper-silver-ionization/

Death, Taxes & Natural Monopolies

Every middle school teacher in America has stood in front of a group of students and delivered the old Benjamin Franklin adage that “the only things guaranteed in life are death and taxes.” Luckily for those of us in the water industry, we know that this middle school lesson is wrong, or at least incomplete – the only things guaranteed thus far throughout history have been death, taxes and natural infrastructure monopolies.

Natural monopolies, and the economics that define them, drive nearly every decision that is made in the municipal water sector, from the decision to construct a new treatment plant, to hiring a new wastewater operator, to adopting a novel technology. Natural monopolies are defined as industries in which long-run average cost continues to decline with increasing quantities of production…in which multiform production is costlier than production by a monopoly. In other words, the cost to a society is greater if there are more producers in the marketplace.

For the water and wastewater sectors, natural monopolies are why we never see two utilities build competing sets of water distribution pipelines in a city, at a cost of billions of dollars, when a single distribution system would be sufficient. The return on investment timeframe for this second utility would be nearly infinite, the capital costs extravagant, and the prices passed down to consumers completely untenable.

Nearly everyone in the industry has concluded, rightfully and with the full backing of modern economic theory, that natural monopolies exist precisely because their cost advantage is so great when compared to possible alternatives. And, while there are readily apparent downsides to any monopolistic supply system, well-regulated water monopolies (complete with public utility commission, rate payer advocates, and price justifications) have shown that they can provide a unique good to consumers. Or so says the last 100 years of infrastructure history in America.

But what if modern economic theory is wrong – or, like Ben Franklin’s old middle school adage, at least incomplete? What happens if the successes of past water monopolies in the United States have limited our thinking as to what success could look like in the future?

We happen to live in a time when many of the business worlds’ presuppositions about what is ‘possible’ have been completely upended. Our most valuable and influential companies don’t produce physical products – Facebook, Google, Twitter – and the sharing economy – Uber, Lyft, AirBnB – has completely upended stronghold tourism and transportation industries, to name a few. Think back twenty years and the eventual impact that these firms would have not just on businesses but society as a whole would be nearly impossible to imagine. Who could have guessed in 1999 that a platform for writing 142 characters could one day displace newspapers as the predominant means of reading daily events? And yet, while the tech industry has radically altered the makeup of our lives, the water industry has continued to rely upon traditional business models with regards to the treatment and distribution of both water and wastewater. The belief that the water industry is not constrained by natural monopoly theory, whether or not it seems impossible today, could be the necessary belief that leads to unprecedented market innovation.

Beginning with the first Roman aqueducts, Western society has always relied upon centralized treatment plants and pipeline systems for collection, treatment, and distribution. For nearly a century, this system was the predominate model of success in the water and wastewater industry, and no one dared, or was at least successful in his/her dare, to take a leap and state that we must implement the next generation solution to our water and wastewater needs. Today, however, the technology exists both for on-site wastewater reuse (as can be seen at water-pod.net), as well as on-site water generation (zeromasswater.com).

If the technology has been developed to safely and effectively produce and treat on-site, should we continue to be dependent upon monopolistic utilities to manage our water and wastewater? If nothing else, the threat of a competitive supply should force existing utilities to become more price competitive and quality cognizant in order to retain their existing customer base.

What if, rather than relying upon pH and DO meters located 10 miles away for ensuring water quality at one’s tap, every consumer had access to real-time water quality monitoring hardware informing them of exactly where their water came from and its quality? Rather than utilizing the grid as a primary means of supply and collection, then, what if said grid was merely an emergency backup to more localized resources and assets? As we’re moving towards more of a connected world, we have the incredible opportunity to completely modify the way we view the interconnectedness of infrastructure.

The constant upheaval that has occurred in various sectors of the global economy over the past 25 years requires one, then, to begin to rethink the ‘necessity’ of natural monopolies in the water and wastewater industry. We are living in a world in which the technology to dethrone these monopolies exists, but disrupting the status quo and deploying at scale is an extremely telling task likely to take years. Even so, we must think outside the box to continue to improve the industry while also ensuring that these novel solutions will protect public health and safety for the long-term. Unlike the tech industry, the public health and safety implications of this infrastructure transition loom large, yet also make the opportunity all the more enticing.

In the United States, there are approximately 42,000 independent water and wastewater utilities. Much has been written across a number of industry journals regarding the need to consolidate these utilities in order to gain the economics of scale. But what if that basic assumption lacks creativity? What if, instead of consolidating, we moved into a market where every neighborhood has multiple, competing utilities? We must stop promoting consolidation to maintain existing water infrastructure just like cell phone companies stopped buying up telephone lines in the age of the cell phone.

Today is an age of incredible innovation reaching across every industry throughout the world. The water industry has experienced its own innovations, yet in some ways seems stuck in the past. As we move into the end of the 2010s, we must begin to ‘take a step back’ and look at all of the technologies in front of us so as to decide what the water and wastewater industry of the future looks like. We should not rely upon the assumptions of the past the determine the future.

Disrupting the assumptions of natural monopolies, while seemingly impossible today, just may be the vision that we need.

The Great Kansas Aqueduct: Solution or Folly from a Bygone Era?

The United States has long been known as a country willing to take gigantic risks in order to build innovative infrastructure for future generations. The Transcontinental Railroad vastly improved cross-country travel, paying for itself through an increase in trade and transport across generations. The Hoover Dam helped tame the mighty Colorado River – creating an ongoing water and energy supply to open up the West for expansion. In modern times, there remain plenty of challenges that could be solved by new infrastructure.

One potential project, though, sits above the rest in its potential to ignite the American public’s imagination: The Great Kansas Aqueduct. But is it worth it?

The State of Kansas once again finds itself in a drought. While individuals and families living in big cities may choose not to notice – continuing to take long showers, water their lawns, wash their cars – those in the Western half of the state that remain reliant on wells and agriculture are struggling to make ends meet in an economy built upon a reliable irrigation supply. Could the Great Kansas Aqueduct provide the solution?

In 1982, the Army Corps of Engineers released the Plains Ogallala Aquifer Regional Resources Study, which detailed for the first time (in any official capacity) the cost and opportunity related to the construction of a 360-mile concrete aqueduct beginning at the Missouri River in the Northeastern part of Kansas and ending in Utica – traveling nearly three-quarters of the way across the state. This aqueduct would deliver approximately 3.4 million acre-ft (AF) of water annually (1 acre-ft = 325,851 gallons) to parched farmers and communities. In turn, the canal would require 15 pumping stations in order to rise nearly 1,750 ft in altitude to reach its ultimate, Utica reservoir.

The cost? $18 billion up-front with an estimated $1 billion in annual ongoing expenses ($400 million in operational costs and $600 million in interest).
The costs are exorbitant – resulting in a $470/AF price of new water for farmers who, according to a 2013 report by the US Department of Agriculture, currently pay approximately $47/AF for off-farm purchased water. Can an agricultural industry with shrinking margins due to increased competition and international trade tariffs handle a 10x increase in water prices?

And yet, there remains something romantic about the Great Kansas Aqueduct. Arizona has its 336-mile Central Arizona Project; California has its 701-mile State Water Project; why shouldn’t Kansas have its Great Kansas Aqueduct? After all, as the Kansas Aqueduct Coalition has stated, “With sedimentation reducing water storage in the East, and the Ogallala being rapidly depleted in the West, Kansas stands to lose more than 37 percent of its water in 50 counties across the state by 2062, or an annual shortfall of 1.86 million acre-feet.”

Thirty-six years after this project was first conceived in full, though, shovels and backhoes remain in their sheds as the Ogallala aquifer drops nearly two feet per year in some counties due to groundwater over pumping. If groundwater withdrawals continue at current rates, most of southwest Kansas will exhaust its water reserves within 25 to 50 years. One tends to think that in times of yesteryear, individuals would have begun construction on this project in February of 1982, begging for forgiveness later. But the time of unbridled infrastructure construction has passed and Kansas continues to stress its water resources.

As one sits and considers the need for the Great Kansas Aqueduct, three questions come to mind: 1) does the Great Kansas Aqueduct solve a problem? Yes – it would increase water supplies for Western Kansas. 2) would it solve the problem for generations? Yes – it would likely be operational for decades. And 3) would it be cost-effective? Unfortunately, not. While the volume of water delivered to Western Kansas may increase, very few people would actually be able to afford it. In fact, the $18 billion estimated to build the Great Kansas Aqueduct does not even include the legal, economic, and ethical costs inherent to initiating eminent domain and forcibly removing people in the way of the canal off of their land.

In essence, the Great Kansas Aqueduct seems to be solely concerned with the supply side of the Kansas water equation, without consideration of market demand. Perhaps rather than digging a big canal, it’s high time the state of Kansas begins to better understand how to more efficiently use its existing water supplies. After all, as Jeff Danner has stated, “the economy of Kansas is highly dependent on perhaps the most water-inefficient agricultural system ever developed, growing corn to feed cows to produce beef. It requires a whopping 1,850 gallons of water to produce a pound of beef… compared to only 26 gallons for a pound of tomatoes.”.

Does the fact that the Great Kansas Aqueduct remains in the ideation stage represent a failure of imaginative thinking in the world of American infrastructure or the success of forward-thinking individuals that realize this infrastructure project can never be fully repaid by its customers? Maybe both, or maybe it is a third option. The fact that the Great Kansas Aqueduct remains a viable solution to many seems to simply be a symptom of our continuing to rely upon old ways of thinking for new problems. When people first began populating Western Kansas, they used surface water and natural rainfall to water their crops. After draining those surface waters, the next generation began to dramatically pump the Ogallala. Today, as the Ogallala declines dramatically, Kansas is simply looking for a new source of water supply that it can systematically deplete over the next 20 years. That can’t be the solution; after all, the United States has long been known as a country willing to take gigantic risks in order to build innovative infrastructure for future generations – but those risks cannot simply repeat the unsustainable mistakes of the past.

It’s time for Kansas to think bigger – to stop worrying about how much water was available five, 10, 50 years ago – and understand that this is the new normal.

It is incumbent upon all of us to realize that and begin to think of ways not just to seek additional supply, but to reduce demand and work together for a more productive, creative future. The time is now to develop a solution, and the Great Kansas Aqueduct is not it.

Op-Ed: L.A.’s stormwater is so filthy it’s illegal. Measure W would clean it up

When rain comes to Los Angeles, a certain kind of relief sets in. The land springs to life. The dust and grit and oil slick, accumulated over a summer of dry weather, gets washed away down storm drains. Everything gleams anew.

But this relief comes at a heavy cost. The stormwater that streams down our streets and into our creeks and rivers is heavily polluted. Oil, gasoline, industrial runoff, heavy metals and many tons of trash are carried by the rain, untreated, straight to our waterways and ocean. This pollution destroys ecosystems, kills wildlife and dirties our beaches. Not to mention that billions of gallons of much-needed fresh water drain out to sea.

In a few weeks the voters of Los Angeles County will have the opportunity to address this problem by supporting Measure W, also known as the Safe Clean Water Program. It’s a parcel tax that, if passed, would begin to fund thousands of backlogged stormwater infrastructure projects that the county has had in the works for decades.

There are significant environmental, social and legal reasons for supporting Measure W. It also happens to be good for business.

L.A. County and the surrounding region has for decades been required to comply with the Clean Water Act, which makes it illegal to allow stormwater pollution to flow into the ocean and other waterways. For decades, the county and its 88 cities have largely ignored the law’s mandates, perhaps in hopes that the costs of compliance could be deferred.

As soon as 2020, L.A. County and its municipalities will face millions, if not billions, in fines for violating the Clean Water Act. These fines will be passed on to tax payers and businesses.

Measure W provides funding to help the county come into compliance.

Yes, it creates a new tax. But it’s far more sensible to pay this nominal tax now than it would be to send our money to regulators later. Moreover, the tax will pay for something we have to do anyway: clean our stormwater.

Thousands of businesses in L.A. County have already invested in stormwater treatment technologies to meet their obligations under the Clean Water Act, and their investments will be credited against the new tax. But three to four times as many businesses have done nothing, instead rolling the dice that non-enforcement will continue.

Measure W credits businesses that have made the right investments while finally bringing enforcement and fairness to a system that for too long has favored those who violate it.

Although the measure is concerned primarily with the control of stormwater pollution, many of the projects it would fund have the added benefits of improving stormwater capture and groundwater recharge. This would increase L.A. County’s sources of local water significantly, which in turn would reduce our pumping needs, thus lowering our electricity demands. The billions of gallons of rain that fall in L.A. County every year are one of our best untapped resources.

 

Opponents of the measure have three main concerns, but each one is unwarranted. They say the funding it would provide is a blank check to the government without independent oversight. In fact, the measure calls for independent oversight of both the funding and all projects it would support — oversight that would be carried out at the local level by municipal, scientific, environmental and business leaders.

They also say the measure lacks a sunset provision. But the parcel tax would not escalate over time. A few decades from now, the funding will dwindle to support merely the ongoing operations and maintenance of the stormwater projects.

Finally, critics complain that the measure doesn’t list the projects that would receive funding. But the county and each of the cities that would be affected have listed their priority stormwater projects publicly for decades.

Every time we pollute the ocean or our groundwater, we take out a loan that will be paid for by our children — not only with greater clean-up costs but greater health risks. For too many years, we have hoped against all evidence to the contrary that water scarcity, pollution and environmental decay will go away on its own. L.A. voters can turn this around by voting to support Measure W.

The Great Midwestern Overdraft

The last 10 years have given rise to considerable consternation as to future water availability in the Western and Midwestern United States. Due to climate change as well as cyclical precipitation patterns, the rains have seemingly disappeared across these regions and the limitless supply of water we enjoyed over the past two centuries has become an anachronism of the past.

Individuals across the government, business, and non-profit worlds alike have developed plans geared towards reducing water demand while increasing future supply — Poseidon’s Carlsbad SWRO plant and California’s Sustainable Groundwater Management being perhaps the two most notable examples in the West. Few deny that the manner in which these regions use water today will drive the future viability of the regions and yet, by virtue of the massive infrastructure projects built following World War II, only one of these regions — the West — is positioned to adjust to a new, drought-like, normal. The Midwest, home of the Dust Bowl, historically known as the “Great American Desert,” and vast over-pumper of the great Ogallala Aquifer, has yet to adopt many of the lessons learned by Western counterparts in managing water supplies.

As a brief but important historical interlude, the Midwest first developed into an agricultural haven during the times of Manifest Destiny, as Congress’ Homestead Act and the Bureau of Reclamation distributed 40 acres of fertile land and cheap water, respectively, to aspiring entrepreneurs. Upon arrival, many of these optimistic Homesteaders found the land to be poor, the topsoil thin, and an ever-present need to irrigate the land in order to produce a steady crop. Over time a greater and greater number of individuals moved to the region — leading to an over-allocation of surface water resources and a need for increased numbers of irrigation projects that were fast becoming uneconomical (Note: for a great history of water west of the Mississippi, the 1986 book “Cadillac Desert” and its learnings remains surprisingly prescient today). As the population of this agricultural breadbasket continued to grow, surface water supplies became more stressed — and poor water management policies led in part to the outsized impact that the 1920s-drought had on the region.

The solution to this Midwestern crisis in the mid-20th century was not, unfortunately, to develop more sustainable water usage plans. Instead, new advances in drilling and pumping technology led farmers, irrigation districts, and municipal utilities to begin municipal-scale groundwater pumping programs in order to mitigate the impacts of surface water losses due to drought. For several decades, this ‘new’ water supply gave rise to an economy built upon some of the largest agricultural conglomerates that the world has ever seen. The Ogallala Aquifer (the largest freshwater aquifer in the world) was both the bounty that these individuals needed and the victim of these individuals’ lack of a coordinated management plan. Today, the Ogallala Aquifer has been depleted by approximately 300 ft in some areas, with losses between 2001 and 2011 equaling approximately 1/3 of the total losses from the entire 20th century. These groundwater resources, unlike the ocean water resources that the West enjoys, are not renewable, and continued over-extraction of this water supply is, at best, short-sighted.

Last year, if one were so inclined to read into Kansas water policy, two major events occurred signaling a shift in the status quo of Midwestern water supplies. First, Southwestern Kansas experienced the worst fires in modern recorded history in May 2017, with the Starbuck fire consuming over 662,000 acres of agricultural land across 23 counties, destroying the economic livelihoods of countless farmers, and permanently altering the landscape of the region. While these fires were, of course, not caused by the overdraft of the Ogallala Aquifer (in fact it was a downed power line), their ferocity signifies a change in the way in which we have to come to manage our land, and the consequences that can emerge following dry spells combined with over-allocated water resources.

Michele Steinberg of the National Fire Protection Association stated that, “Lack of mutual aid… and access to roads and water played a role.” Second, outgoing Gov. Sam Brownback held a state-wide ‘Water Tour’. Throughout this tour, Brownback spoke with constituents on how best to balance the management of water resources with the economic and cultural considerations that come from a conservative, agricultural state. One aspect of this tour was also to promote the Local Enhanced Management Area (LEMA) tool created by Kansas lawmakers in 2012 that saw a 35 percent decrease in water usage by participating farmers in just four years. Here, a voluntary (carrot) mechanism promoted by the government developed a means to reduce water usage without any compulsory (stick) penalties.

What resulted from these fires and this tour?

First, FEMA, the Department of Agriculture, and private insurance companies paid out hundreds of millions of dollars to farmers in order to compensate individuals/companies for their lost income and/or homes. President Donald Trump issued a Federal Disaster declaration, allowing impacted individuals to seek funds to help offset the economic hardships that have followed. Since the fires have died down, there has been little to no press on the follow-up to this disaster. A couple human interest pieces followed by silence. No discussions of improving water availability or disaster planning, no editorials on more resilient ground cover throughout the state, just crickets.

Secondly, Brownback’s tour of the state has led to little tangible policy to date other than a few press releases and speeches. While the LEMA tool has proven effective in Kansas, I am unable to find any follow up information regarding efforts or campaigns geared towards increasing the prevalence of these organizations in Kansas since August 2017. In fact, recent calls to the state’s Department of Environment resulted in a response detailing how the state has little understanding of how much money is being spent on water infrastructure every year, including drinking water, wastewater, storm water management, etc. Meanwhile, as the governorship transitioned from Brownback to Jeff Colyer, the Ogallala aquifer continues to decline in water supply by 5 in. every year. Kansas’s great achievement in reducing the speed at which the Ogallala declines remains insufficient — it is truly a manifestation of every economics undergraduate introductory lesson to the Tragedy of the Commons.

So, what can the Midwest do? How can the Midwest begin to come to terms with its own reality and understand that, unlike the West, it does not have a limitless supply of ocean water available along its borders? It is clear that, unlike during the times of the Dust Bowl, when a ‘limitless’ groundwater supply was discovered to supplement surface water sources, no such additional resource exists. Instead, the Midwest is entering into a timeframe in which Day 0 is fast approaching, a time when all emergency technology deployment and sustainable groundwater management plans will no longer be sufficient. Thus, we are entering into a time during which we must, like my old coach used to say, act with a hell of a lot more hustle and urgency.

What we need now is for business leaders and policymakers in this region to begin working together not to regulate, but to manage groundwater resources. While many in the Midwest scoff at the environmental ideals of California, the latter state’s Sustainable Groundwater Management Act is an excellent example of what strong, centralized leadership can do to optimize groundwater resources. Our policymakers’ goal must be to protect and represent American citizens — they are failing to do so if they fail to protect the water supplies of future generations. In addition, local communities must begin to develop greater tracking of extant groundwater wells, both permitted and off-grid, in order to better understand how withdrawals are shaping the aquifer and the region writ large. Business leaders must begin to work together to manage water usage — with farmers transitioning away from water intensive crops such as soy in favor or more drought-resistant crops and local manufacturing beginning to implement an internal price of water. In the end, true groundwater management will require a holistic approach to manage resources across all stakeholders, leading to a modern “Coasian equilibrium”.

What we are experiencing today in the Midwest is nothing new — academic books and papers have discussed the unsustainable groundwater withdrawals of the Ogallala for decades. But what is different is that this impending water crisis continues to be met with little resistance. The Midwest has, on an institutional level, done very little. If we hope to enjoy a region of the future that continues to thrive on agriculture, we better begin planning for that future. If we don’t, we are likely to wake up to a Midwest that bears little resemblance to the land that many, including myself, grew up to enjoy. 

Demography is Destiny: The Looming Wave Of Retirements In The Water And Wastewater Industry

It’s a foregone conclusion that operators are on their way out at utilities across the country, yet the workload remains and could even intensify. When it comes to preserving talent, institutional knowledge, and the future of the industry, the solution may be closer than you think.

The forces of inevitability have finally settled on the U.S. water and wastewater industry; in the very near future, the sector will say goodbye to our most valuable resource: our senior water and wastewater operators. Regulators predict that nearly half of the top-level water and wastewater operators — the professionals who keep our water clean and our environmental systems healthy — will begin their well-earned retirement over the next 12 to 18 months. The rest of us are left wondering, how do we keep our water and wastewater systems online and operating safely?

Water and wastewater operators are the unsung third pillar of public safety, behind firefighters and police officers. These are the men and women who make sure our water supplies meet drinking water standards and our rivers, streams, groundwater basins, and coastal waterways remain healthy, vibrant habitats for plant and animal species. These operators are the final line of defense between a major public health or environmental disaster, and we in the water industry haven’t quite figured out how to make up for their absence.

A confluence of forces has dealt us this hand. The Clean Water and Safe Drinking Water Acts (whose regulations prompted a hiring spree) have reached their 40-year anniversary, and the operators who began their careers with the new regulations are ready to retire. Add to that the fact that the 2008 economic crisis led many senior operators to delay their retirement; these operators have now reached a level of economic security that allows them to retire comfortably at the same time that the next generation of operators has reached retirement age, leading to a tidal wave of retirements all at once.

waterTALENT stands ready as one part of the overall solution to the workforce challenges facing the water and wastewater industry.

A Matter Of Timing
Just as the major water and wastewater regulations turned 40 years old, so too has the capital infrastructure they spawned America is facing $1 trillion in deferred water and wastewater infrastructure investments, which in and of itself would be a challenge, but is all the more challenging given the greater source water quality challenges we face as we discover more and more contaminants of emerging concern in our drinking water. These forces — demographic, financial, regulatory, and technical — create a perfect storm of challenges for the leaders of water and wastewater facilities.

Fortunately, water and wastewater utilities are facing these challenges head-on. Utility leaders have been working to address this demographic crisis for years through a number of successful strategies, including: apprenticeship programs, workforce development organizations, succession planning, internships, and job fairs, among other initiatives. These efforts should give us all comfort for the long-term health of the industry.

But even this new generation of water and wastewater leaders will still leave the sector 20 years behind filling the senior positions that require a career’s worth of experience to successfully execute. How do we replace the experience of our senior operators in the near term as they leave the workforce?

A Path Forward
At waterTALENT, we believe one part of the overall solution is creating an on-call, nationwide team of licensed, experienced operators who can fill any temporary role left by an unexpected vacancy in a water or wastewater utility. As the pool of experienced operators shrinks, the industry needs a solution that can help utilities and districts flex through staff transitions, while maintaining uninterrupted compliance and avoiding any costly downtime. waterTALENT’s pool of over 500 top-tier, licensed, and vetted water and wastewater operators spread across 36 states are ready to be deployed at a moment’s notice. These operators come equipped with a wide array of the skills and experience from decades of hands-on work inside plants and on field crews, from shift supervisor to chief plant operator to public works director.

As an industry, the water sector needs to embrace the fact that, while our best operators may have retired, their careers are far from over. The next mission for these experienced operators is to devote their time and energies to training the next generation of operators and ensuring that the systems they helped build are able to continue protecting the communities where they live. This service can come in a number of different forms: mentorship programs, training, knowledge transfer, standard operating procedure updates, and transitional leadership to help utilities plan for the next generation of successful operations.

The vast majority of senior, professional, experienced operators we have worked with are eager to continue to serve the community and are concerned that they’re leaving the helm of a ship not set for fairer seas. Every one of our operators is concerned with the next generation of operators, their professional development, and their ability to operate and maintain the infrastructure that took decades to build. Perhaps most importantly, the senior operators in the water and wastewater community still believe in the mission to protect public health and the environment and know what it takes to do so.

With each passing day, cities, districts, agencies, and companies are feeling the demographic pressures as their senior operators look towards retirement. Nothing will prevent these departures from happening; demography is destiny, and trying to reverse the trend of retirements is a fruitless effort. What we can do is be proactive, be flexible, plan for the long term, and have support of the short-term transition we’re facing right now.